Term loan vs Asset finance
When the money is buying a tangible, resaleable asset, asset finance is usually cheaper than a term loan because the lender's risk is lower — they hold title, or a fixed charge, over something with a known second-hand value.
| Criterion | Term loan | Asset finance |
|---|---|---|
| Security | Debenture and often guarantees | The asset itself |
| Typical cost | Higher for the same borrower | Lower, reflecting recoverable security |
| Deposit | None, but full amount is debt | Commonly 10–20% |
| Term | Set by lender policy | Matched to the asset's useful life |
| Ownership | Immediate | On final payment (HP) or never (lease) |
| Balance sheet | Debt on balance sheet | Depends on structure and accounting standard |
Funding a ten-year machine over three years starves cash flow; funding a three-year vehicle over seven leaves you paying for an asset you no longer use. Asset finance is designed around this matching principle and a term loan is not.
Sale-and-leaseback or asset refinance releases cash from owned equipment without new external security. It is one of the most underused sources of liquidity in asset-heavy businesses and often prices well below unsecured debt.
Where the spend is intangible — software, hiring, marketing, working capital — there is no asset to secure and a term loan or revolving facility is the right structure. Mixed programmes are usually best split across both.
Fund tangible assets with asset finance and everything else with term or revolving debt. Splitting the requirement almost always lowers the blended cost.
Some lenders fund soft assets such as fit-outs and IT, but at higher rates and shorter terms because resale value is limited.
Hire purchase suits assets you want to own and keep; leasing suits assets you replace on a cycle. Tax and accounting treatment differ, so check with your accountant.
Not sure which route fits? Describe the requirement once and we will structure it and approach the providers whose criteria match. No upfront fees — charges are due only once funding is in place.
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